India’s First Sovereign Green Bond Raises ₹8,000 Crore

According to the RBI, the 10-year bond was sold to 57 investors and the five-year bond to 32 buyers, with the bids received being worth more than 4 more than the amount on offer.

As local investors flocked to the bonds, the first sovereign green bond offering, worth 8,000 crore, was completely subscribed on Wednesday at a yield that was higher than anticipated.

At a dividend yield of 7.10%, 5 basis points less than the sovereign yield for the same duration, the Reserve Bank of India auctioned 4,000 crore worth of five-year bonds. 

Additional 10-year notes worth 4,000 crore were offered for 7.29%, which is six basis points less than equivalent government securities.

According to the RBI, the 10-year bond was sold to 57 investors and the five-year bond to 32 buyers, with the bids received being worth more than 4 times the value on offer.

“It (sovereign green bonds) was sold well at a yield that was around 5 basis points lower than usual.” It has all the GSEC characteristics in addition to the tag for green bonds. 

Traders anticipated a future demand to materialize and made some money. In due course, FPI who are required to invest in green bonds would be allowed to do so, according to JM Financial managing director Ajay Manglunia.

The lower yields reflect the demand for these bonds, the sale of which would fund public programmes aimed at lowering carbon emissions. By 2070, Prime Minister Narendra Modi wants all greenhouse gas emissions to be zero.

According to traders, domestic players showed the most interest in the debut issue, but demand from international investors will increase moving forward. 

Local banks and mutual funds may issue these green bonds at pace with other sovereign bonds even if they are not required to do so.

Insurance firms are permitted to categorize these as infrastructure investments.

Traders also think that the government’s savings or borrowing limit won’t be significantly reduced as a result of these bonds.